CHANAKYA NATIONAL LAW UNIVERSITY

Final draft for complete fulfillment of project of Property Law

on

“Condition Restraining Alienation”

Submitted to:
Mr. Vijay Kumar Vimal
(Faculty of Law)

Submitted by:
Adya Sharma
Roll number: 211910
1st year, B. A. LL. B. (Hons.)

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 DECLARATION

I hereby declare that the work submitted in Property Law Project report entitled “Condition
restraining alienation” submitted at Chanakya National Law University is an authentic
record of my work carried out under the supervision of Mr. Vijay Kumar Vimal. I have not
submitted this work elsewhere for any other degree or diploma. I am fully responsible for the
contents of my project work.

SIGNATURE OF CANDIDATE:

NAME OF CANDIDATE: Adya Sharma

ROLL NO.: 211910

CHANAKYA NATIONAL LAW UNIVERSITY

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 ACKNOWLEDGEMENT

In the completion of this project, I would firstly like to thank Mr. Vijay Kumar Vimal, Faculty of
Property Law, whose guidance helped me a lot in structuring my project.

I owe the present accomplishment of my project to my friends, who helped me immensely

through materials throughout the project, and without whom; I could not have completed it
presently.

I would also like to extend my gratitude to my parents and all those unseen hands who helped me
out at every stage of the project.

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 TABLE OF CONTENTS

DECLARATION.............................................................................................................................ii

ACKNOWLEDGEMENT..............................................................................................................iii

TABLE OF CONTENTS...............................................................................................................iv

INTRODUCTION...........................................................................................................................1

TRANSFER SUBJECT TO A CONDITION OR LIMITATION..................................................5

RESTRAINT ON TRANSFER.......................................................................................................7

AGREEMENTS IN RESTRAINT ON ALIENATION................................................................10

Categorisation of Restraints.......................................................................................................11

ABSOLUTE RESTRAINT....................................................................................................11

PARTIAL RESTRAINT........................................................................................................13

APPLICATIONS OF THE SECTION..........................................................................................15

Application Of The Section To Gifts.........................................................................................15

Application Of The Section To Partitions..................................................................................16

EXCEPTIONS TO THE GENERAL RULE.................................................................................20

Lease..........................................................................................................................................20

Married Women.........................................................................................................................21

Repugnant conditions.................................................................................................................22

CONCLUSION..............................................................................................................................24

BIBLIOGRAPHY..........................................................................................................................25

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 INTRODUCTION
Ownership of the property carries with it certain basic rights, such as a right to have the title to
the property, a right to possess and enjoy it to the exclusion of everyone else, and a right to
alienate it without being dictated to, save under a provision of law. An absolute right to dispose
of the property indicates that the owner can sell it for consideration or can donate it for religious
or charitable purposes he may gift it to anyone, mortgage it or put it up for lease. Save with the
help of law, no other person can interfere with this power or right of the owner or dictate to him,
what should be the manner of alienation, should he alienate or not, or even what kind of use it
should be put to. In short, this right of alienation, which is one of the basic rights of the owner,
cannot be unreasonably encroached upon by anyone through a private agreement. This general
rule is applicable despite there being an express contract to the contrary and prevents the
transferor from controlling the power of alienation of the transferee once the interest in the
property is transferred.

The principle underlying this section is that a right of transfer is incidental to, and inseparable
from, the beneficial ownership of property. An absolute restraint, therefore, on that power is
repugnant to the nature of the estate, and an exception to the very essence of the grant. It is the
essence of the ownership of property that it confers free power of alienation. Alienation of such
property cannot be made upon the condition or limitation that the alienee shall not alienate the
property to anyone. Such a condition or limitation is void, because, when a transferee obtains the
property by transfer, he has the power to alienate it to any person by the law. If such a condition
or limitation were valid in law, then it would oust him of all the powers which the law gives him;
this would be against reason, and therefore, such a condition or limitation is declared to be void.
The rule laid down in this section, merely, that where the property is transferred, subject to a
condition or limitation, absolutely restraining the transferee from parting with or disposing of his
interest in the property, the condition or limitation is void, is founded on grounds of public policy
to make the property alienable, thus, allowing its free circulation and disposition. 1 Rule against
perpetuity as embodied in Section 14 of the Transfer of Property Act cannot have any application

1
Jagdeo Sharma v. Nandan Mahto, AIR 1982 Pat 32.

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to the creation of an easement grant and the Transfer of Property Act is not concerned with an
easement.2

The section applies only to cases where the restraint on alienation is absolute. The reason is, that
a right of transfer is an incident of ownership of property, and an absolute restraint is repugnant
to ownership. The section provides that a condition or limitation, absolutely restraining the
transferee from parting with or disposing of his interest in the property is void. The section is
silent as to the validity, or otherwise, of qualified restraint on alienation. It may be taken,
therefore, that a condition or limitation imposing a partial restraint on alienation is not void.3

The partition of pre-existing rights does not annul the right of the coparcener or convert it into an
obstructed right. It merely adjusts or resolves joint rights into several rights. So the restriction of
alienation by the allottee in a deed which is either a partition deed or a family arrangement deed
in respect of joint family properties is not hit by and does not come within the purview of Section
10 of the Act.4

Where an act or transaction does not amount to a transfer, but the act or transaction imposes a
condition or limitation, absolutely restraining the party, or any person claiming under him, from
parting with or disposing of his interest in the property, the condition or limitation is void on the
principle underlying this section.5

Object and Scope of the Study

Understanding what the role the right to exclude plays in defining property is important for
several reasons. First, having a better grasp of the critical features of the property may promote a
clearer understanding of the often-arcane legal doctrine that surrounds this institution. Second,
understanding the domain of property is an important preliminary step in developing a
justification or critique of property from the perspective of distributive justice. Third,
formulating a more precise conception of property may be necessary to offer a complete account

2
Mohini Debi v. Ramdas Banerjee, (1991) 1 CHN 53 (Cal) (DB).
3
Ratanlal v. Ramanujdas, AIR 1944 Nag 187.
4
Hariram v. Ram Asrey, AIR 2006 All 331.
5
Prithmi Chand v. Sundar Das, AIR 1946 Pesh 12.

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of constitutional provisions that protect “property.” In any event, for those who are learning the
concept of the law of property, the question is one of intrinsic interest, whether or not it has any
payoff in resolving more immediate concerns.

Ownership of property carries with it certain rights, such as the right to have the title to the
property, a right to possess and enjoy it to the exclusion of everyone else, and a right to alienate
it to the exclusion of others without being dictated to. Sections 10 to 18 of the Transfer of
Property Act, 1882 contain the first set of rules that have to be observed while alienating a
property. Since it is a principle of economics that wealth should be in free circulation to get the
greatest benefit from it, these Sections provide that ordinarily there should be no restraints on
alienation.

This project seeks to analyse the rules regarding transfer of property which talks about conditions
restraining alienation of property once it is transferred. Firstly I have tried to look into the
general provision that all such conditions should be void and then will talk about partial
restraints and other conditions that are valid. Finally, conditions restraining enjoyment of
property which can be enforced will be discussed. I have analysed the law in light of decided
Supreme Court and major High Court cases.

Research Methodology

The methodology of research used in this project is not just one single type of method but a
combination of methods. A descriptive method was used to research this topic. It included fact-
finding inquiries. As researchers, we have largely based our studies on the secondary sources and
the materials available from such sources. The study largely focused on the analysis of the
decisions of the court thereby trying to bring forth a better interpretation of the provisions of the
Act. Thus, the project has also been completed with the large support of the subject of the
Interpretation of Statutes. But the simultaneously analytical method of research was also used to
use the facts or information available to make an analytical evaluation of the material.

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Chapterisation Plan

The project has been divided into seven chapters where each highlight different subjects and
concerns relating to the topic of the study, i.e., Transfer subject to a Condition or Limitation.
Following is the brief outline and description of the question dealt with, in each of the respective
chapters.

1. The first chapter is the introductory chapter titled “Introduction”. This chapter briefly
describes the right of the owner of the property and different sections related to the when
conditions or limitations are allowed and not in respect of transfer of property. The chapter
mainly highlights the various sections under The Transfer of Property of Act, 1882.
2. The second chapter titled “Transfer subjected to condition or Limitation” deals with, in
detail, the provisions relating describing conditions and limitations for transfer like section
10 of TP Act.
3. Chapter 3 titled “Restraint on Transfer” discusses the section lays down that where property
is transferred subject to a condition or limitation absolutely restraining the transferee from
parting with or disposing of his interest in the property, the condition or limitation is void.
4. Chapters 4 in essence discuss the agreements in restrain of alienation, what will be the
position of such contract in eyes of law, whether it would be valid or not. Moreover, restrain
is categorizes into the two categories partial and absolute; which are briefly discussed in the
chapter.
5. The fifth part of this project deals with the application of the section to different deeds like
gift, partition.
6. The sixth chapter discusses the exception to this rule and the reasoning behind them.
7. The final chapter titled “Conclusion” briefly discusses the whole project and finally sums up
the current position as regards transfer subject to conditions and limitations after critical
analysis of various case laws and opinions on the matter.

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 TRANSFER SUBJECT TO A CONDITION OR
LIMITATION
The section applies only to cases where property is transferred. 6 It has no application to cases,
where the act or the deed does not transfer property. To constitute a ‘transfer’, there must be a
conveyance by one living person to one or more other living persons within the meaning of
Section 5.

The word ‘condition’ in this section means a condition superadded on a transfer of property,
whereby an interest which is created by the transfer in the property, is to cease to exist, in case a
specified uncertain event shall happen, or in case a specified uncertain event shall not happen. In
other words, the expression ‘condition’ means condition subsequent, which divests an estate
which has already vested. It is to be distinguished from the word ‘limitation’.

The word ‘limitation’ refers to words limiting or defining the nature of the estate created. In In
re Machu,7 Chitty, J., defined ‘limitation’ as “the definition or circumscription in any
conveyance of the interest which the grantee is intended to take”. Thus, in the case of a transfer
to ‘a person and his heirs and assigns,’ the ‘heirs and assigns’ are not transferees. The heirs of the
transferee take the estate by inheritance from the transferee instead of from transferor under the
transfer, as they do when the estate is transferred by the transferor to a person for his life and
then to his heirs, and in which case, the heirs take under the transfer and not by inheritance. In
the former case, the transferee may dispose of the estate and his heirs may get nothing; but, in the
latter case, the original transferee can dispose of only his life-interest, and the remainder passes
to his heirs after his death.

Whether a transfer conveys an absolute estate or only a life-interest is a matter of construction of

the instrument of transfer. If the conveyance is to ‘a named transferee and his heirs,’ the words
‘and his heirs’ are words of limitation, and the limitation being void, the named transferee takes
an absolute estate; but, if the conveyance is to the named transferee for life and after his death to
his heirs, the heirs are the direct objects of an independent and distinct transfer. Thus, in a will,

6
Somithim v. Duggirala Lakshmi (1965) 2 AndhWR 72.
7
21 Ch D 838 (842, 843).

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the words ‘putra poutradi krame’ (from generation to generation) have been held to be words of
limitation denoting an estate of inheritance.8

In Madhav Rao v. Balabhai,9 the settlor made a provision for his daughter, during her life, for her
sole and separate use, and after her death in trust for the male heirs of the said daughter. The
settlor died and then the daughter died leaving six sons all of whom were living at the date of the
settlement. The heirs of the settlor contended that the limitation, in favour of the daughter’s sons
after her death was contrary to law and void. It was held that the true interpretation of the
settlement was that the daughter’s sons were the persons in whose favour an independent gift
was made, and they did not take by inheritance from her.

It seems settled, that whereby a valid transfer an absolute estate is created in favour of person but
a condition of limitation is imposed which is repugnant to the absolute estate so created the
condition or limitation is void, but the transfer is valid and creates an absolute estate in favour of
the transferee.10 If the context shows an intention to prohibit an alienation, which is repugnant to
the transfer, it is void11 So, where on a transfer, a condition is imposed providing that neither the
grantee nor his heirs should transfer the property, or any part thereof, by way of gift, except a gift
for religious purposes, which also should not exceed a given extent, the condition is more
consistent with an attempt to restrict the powers of an absolute owner, and as such restriction is
repugnant to the absolute estate and is void.12

A transferor cannot indirectly create interest in the estate of a character unauthorised by law.
Limitations which purport to create an estate, not recognised by law, e.g., an estate tail, vitiate
the transfer,13 to that extent, so that the transferee takes an estate for life and his heir-at-law
succeeds to the estate on his death as an absolute owner. In such cases, it has to be assumed that
the transferor intended to give only a life-interest to the transferee first named.

8
Ram Lal v. The Secretary of State, ILR 7 Cal 304.
9
AIR 1928 PC 33.
10
Saraju Bala Devi v. Jyotirmoyee Devi, AIR 1931 PC 179.
11
Lalit Mohan Singh v. Chukkun Lal, ILR 23 Cal 834.
12
Supra, Note 1.
13
Juttendromohun v. Ganedromohun, LRIA (Sup) Vol. 47.

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 RESTRAINT ON TRANSFER
The section lays down that where property is transferred subject to a condition or limitation
absolutely restraining the transferee from parting with or disposing of his interest in the property,
the condition or limitation is void. It is a question of substance, not of form, whether the
condition or limitation takes away absolutely the whole power of alienation substantially. In
Rosher v. Rosher,14 the testator devised an absolute estate to his son and provided that if he sold
the property during the lifetime of his wife; she should have an option of purchasing it at a price
that has one-fifth of the market value. This was held to be, in effect, an absolute restraint and
void.15

However many people may desire to keep their property in the hands of particular persons they
cannot succeed in doing so by violating the provisions of this Act. Once the property is given
absolutely to a particular person as transferee, a provision that that transferee shall not alienate it
is void under this section. This prohibition does not, however, apply where the property is not
given to the transferee absolutely but only for enjoyment or convenience. There the question
does not arise, because the property is not absolutely transferred.16

The question, whether, in a particular case, a condition or limitation is void, depends for decision
upon, whether it imposes an absolute or only a partial restraint within the meaning of this
section. To determine whether the restraint was absolute or partial, the Court has to gather the
intention of the transferor from the contents of the instrument of transfer. If he intends to protect
the property and detain it and prevent it from passing otherwise than he intends, or, for all
practical purposes, he reserves to himself the power of absolutely restraining the transferee, or
any person claiming under him, from parting with or disposing of his interest in the property, the
condition or limitation, is void.17In other words, where the restriction, in the instrument of
transfer, on the power of alienation, absolutely derogates from the full proprietary right conferred
upon the transferee, the restriction is void.18 But a just and reasonable partial restraint is valid.

14
26 Ch D 801 (811).
15
Trichinopoly Varthaga Sangam. Ltd. v. Shanmughasundaram, ILR 1939 Mad 954.
16
Mudara v. Muthu, AIR 1935 Mad 33.
17
Gomti Singh v. Anari Kuar, AIR 1929 All 492.
18
Pratap Das v. Nand Singh AIR 1924 Lah 729 (1).

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In the former case, the condition or limitation amounts to an absolute restraint. Thus, a condition
restraining alienation during a lifetime is invalid.19 In Renaud v. Taurangeau20 the Privy Council
held that a restriction for a period of twenty years is contrary to general principles of
jurisprudence. Where the restriction with respect to time is not unreasonable, the case is not hit
by this section. Whether the restriction is or is not reasonable would depend upon the facts and
circumstances of each case. It is not possible to lay down any hard and fast rule.

An ekrarnama, which was registered, was entered into consequent on the execution of a sale
deed between the vendor and the vendee, that the latter would re-convey the property to the
former on the return of the consideration-money within five years. This ekrarnama was held not
invalid under Sections 10 and 11 of the Act.21 The condition not to alienate except to particular
persons may be bad, unless, under the circumstances of a particular case, the limitation does not
amount to absolute restraint. In category (3) above where a deed of transfer provides that the
vendee should not transfer the property to anyone excepting the vendor or his heirs the clause is
contrary to Section 10 of the Act and is void.22

When an absolute right is transferred in favour of the assignee under sale deed and sale deed
contains a condition limiting that right, restricting the rights of the assignee to sell the property
except to assignor, the said clause would definitely come within mischief of Section 10 and it
would be void.23 Where State Government prohibits the transfer of regularised land by a person
who has committed encroachment on land of Government or Municipal Boards, after
regularisation for a period of ten years, is valid.24

Condition not to sell out of the family has been held good in Doe d Gill v. Pearson,25 and In re
Macleay.26 In Mohammad Raza v. Abbas Bandi,27 the Judicial Committee observed that such
restriction is not absolute but partial; it forbids only alienation to strangers, leaving the transferee
free to make any transfer to any person within the ambit of the family. In this case, in a

19
Rosher v. Rosher, 26 Ch D 801.
20
LR 2 PC 4.
21
Loknath Khound v. Gunaram Kalita, AIR 1986 Gau 52.
22
Jagar Nath v. Chhedi Dhobi, AIR 1973 All 307 (309) : 1973 All LJ 202.
23
Bhavani Amma Kanakadevi v. CSIDK Maha Idavaka, AIR 2008 Ker 38 (41).
24
Shiv Paresar v. Municipal Board. Mount Abu. (1997) 1 WLC 443 (Raj).
25
6 East 173.
26
LR 20 Eq 186.
27
AIR 1932 PC 158.

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compromise of conflicting claims, a family arrangement was come to; it was agreed that the lady
should take what she claimed upon certain conditions, one of which was that she should not
alienate the property outside the family. Judging the matter upon abstract grounds, their
Lordships, thought that where a person has been allowed to take property upon the agreement
that it shall not be alienated outside the family, those who seek to make title, through a direct
breach of this agreement, could hardly support their claim by an appeal to high sounding
principle. Their Lordships held that a partial restriction upon the power of disposition would not,
in the case of a transfer inter vivos, be regarded as repugnant; and that, in view of the terms of
this section, it would be impossible to assert that such an agreement is contrary to justice, equity
and good conscience.

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 AGREEMENTS IN RESTRAINT ON ALIENATION
The section applies only to a case where property is transferred subject to a condition or
limitation. It contemplates a case of a completed transfer and a condition restricting the
alienation of the estate transferred. It has no application, for instance, to an agreement affecting
the transferee personally. So, where A sells his house to B, and B executes an agreement that in
case he transfers the house, he would sell it back to A for the same price and to nobody else
unless A declines to purchase it for that price, such an agreement is not void under this section,
as being an absolute restraint on alienation. It is merely a personal contract between A and B,
and as such A can enforce it both against B and the transferee of B, if he takes the transfer with
notice of the contract.28

Although, where property is transferred subject to a condition or limitation absolutely restraining

the transferee from parting with or disposing of his interest in the property, the condition or
limitation is void, yet, where there is a special personal contract between the parties, which is
binding on them and can be enforced against a transferee with notice, it may operate as a
personal covenant binding the covenant or personally and creating an obligation enforceable
against a transferee from him with a notice under Section 40. The Privy Council has held in Jafri
Begum v. Syed Ali Raza,29 in relation to an award that an invalid condition, agreed to among the
parties, may bind them.

It may be stated that, although a condition or limitation, subject to which a property is

transferred, is void, yet, if a subsequent agreement, independent of the transaction of the transfer
of the property itself, is made, it is binding upon the parties.

28
Debi Dayal v. Ghasita, AIR 1929 All 667.
29
ILR 23 All 383.

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Categorisation of Restraints

Since alienation of property is the sole prerogative of the owner of the property, he is empowered
to sell it at any point in time, for any consideration, to any person, and for any purpose. There are
certain integral components of the very term “alienation” and include selection purely at the
discretion of the transferor or the transferee and the time or consideration for the transfer.
Restraint on alienation thus would include a condition that dictates to him when to sell it, to sell
it at how much consideration, or how to utilise the consideration; to whom to sell or for what
purpose he should sell. These restraints can appear in the following ways:30

 Restraints on transfer for a particular time:

 Restraints directing control over consideration/money;
 Restraints with respect to persons/transferee; and
 Restraints with respect to the sale for particular purposes or use of property

ABSOLUTE RESTRAINT

Absolute restraint refers to a condition that attempts to take away either totally or substantially
the power of alienation.31 Section 10 says that where property is transferred subject to a condition
or limitation which absolutely restraints the transferee from parting with or disposing of his
interest in the property is a void condition. Restraint on alienation is said to be absolute when it
totally takes away the right of disposal. In the words of Lord Justice Fry, 32 “from the earliest
times, the courts have always learnt against any device to render an estate inalienable.”33

Section 10 relieves a transferee of immovable property from an absolute restraint placed on his
right to deal with the property in his capacity as an owner thereof. As per section 10, a condition
restraining alienation would be void. Section applies to a case where property is transferred
subject to a condition or limitation absolutely restraining the transferee from parting with his

30
Dr. Poonam Pradhan Saxena, Property Law, 2nd Ed. (Lexis Nexis:Nagpur, 2011).
31
Bhavani Amma Kanakadevi v CSI Dekshina Kerela Maha Idavaka, AIR 2008 Ker 38.
32
In re, Parry and Dags (1886) 31 Ch D 130.
33
Zoroastrian Co-operative Housing Society v District Registrar Co-operative Societies (Urban), AIR 2005 SC
2306.

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interest in the property. For making such a condition invalid the restraint must be an absolute
restraint.

Two persons purchased securities in their names with the money belonging to a third person.
And on his instructions they deposited the securities in the name of that person and also the
interest accruing on them in that person’s account. The securities carried the stipulation that they
were not to be transferred. In order to wipe out his liability to another person, that third person
tendered the securities to his creditor by way of satisfaction to hold them as a beneficiary. It was
held that from the very beginning a beneficial interest was created in favour of the person with
whose monies the securities were purchased and, therefore, his beneficial interest was
transferable because otherwise the whole transaction would have been hit by section 10.34

Condition imposing absolute restraint on the right of disposal is a void condition and has no
effect. For example, a person makes a gift of a property to another person (transferee) with a
condition that he will not sell it. This condition imposes an absolute restraint. If the transferee
sells that property, the sale will be valid because conditions imposing absolute restraint are
void. A made a gift of a house to B with a condition that if B sold the house during the lifetime
of A’s wife, she should have an option to purchase it, for Rs. 10,000. The value of the house was
Rs. 10,000. This was held to be having the effect of absolute restraint and was void. 35 The
provision of law against absolute restriction on alienation is founded on the principle of public
policy, namely that there should be free transferability of property. A transfer of property for
construction of a college contained a condition that if the college was not constructed; the
property would not be alienated. Rather it would be re-conveyed to the person transferring it.
The condition was held to be void and, therefore, not capable of being enforced.36

Where the settler intending to create a life estate in favour of his son-in-law ‘M’, handed over the
title-deeds of the said property to M indicating that he had divested himself of all rights in the
property but imposed absolute perpetual restraint on alienation, it was held that the restraint was
void since the transfer was an absolute transfer in favour of M. Under the provisions of section
10, the sale deed made by the heirs of M in favour of appellants was a valid sale because the

34
Canbank Financial Services Ltd. V Custodian, (2004) 8 SCC 355.
35
Rosher v Rosher, (1884) 26 Ch D 801.
36
DhavaniAmmaKankadevi v C.S.I. Dekshina Kerala MahaIdavaka, AIR 2002 Ker 38.

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heirs were entitled to ignore the restraint on alienation and deal with the property as absolute
owners.37

The condition restraining lessee from alienating leasehold property is not illegal or void.38

PARTIAL RESTRAINT

Section 10 has only provided for absolute restraints. It is silent about the partial restraints. Where
the restraint does not take away the power of alienation absolutely but only restricts it to a certain
extent, it is a partial restraint. Partial restraint is valid and enforceable. In the words of Sir
George Jesel, “the test is whether the condition takes away the whole power of alienation
substantially; it is a question of substance and not of mere form…. You may restrict alienation in
many ways, you may restrict it by prohibiting it to a particular class of individuals or you may
restrict alienation by restricting it to a particular time.”

A total restraint on the right of alienation is void but a partial restraint would be valid and
binding. This rule is based on the sound public policy of free circulation.39

A restriction for a particular time or to a particular or specified person 40 has been held to be an
absolute restriction. A compromise by way of settlement of family disputes has been held to be
valid in Mata Prasad v Nageshwar Sahai41, although it involved an agreement in restraint of
alienation. In this case, the dispute was as to succession between a widow and a nephew. A
compromise was done on terms that the widow was to retain possession for life while the title of
the nephew was admitted with a condition that he will not alienate the property during the
widow’s lifetime. The Privy Council held that the compromise was valid and prudent in the
circumstances of the case.

While an absolute restraint is void, a partial restraint may not be. For instance, a partial restraint
that restricts transfers only to a class of persons is not invalid. However, if the transfer is
restricted to being allowed only to specific individuals, then it is an absolute restraint and hence,
37
Kannamal v Rajeshwari, AIR 2004 NOC 8 (Mad).
38
RaghuramRao v Eric P. Mathias, AIR 2002 SC 797.
39
K. Muniaswamy v K. Venkataswamy, AIR 2001 Kant 246.
40
Mohd. Raza v Abbas BandiBibi, (1932) 59 IA 236.
41
Mata Prasad v Nageshwar Sahai , (1927) 47 All 484.

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void. How is it determined if a restriction is absolute or partial? In order to determine whether a
restriction is absolute or partial, one must look at the substance of the restraint and not its mere
form. Ordinarily, if alienation is restricted to only family members, the restriction is valid.
However, where in addition to that restriction, a price is also fixed which is far below market
value and no condition is imposed on the family members to purchase, then the restraint is an
absolute one and hence, void, although, in form, it is a partial restraint. Even if such a
substantially absolute restriction is limited by a time period that is, it applies for a specific time
period only, it remains void.

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 APPLICATIONS OF THE SECTION

Application Of The Section To Gifts

Under Section 126 of the Act, the donor and donee may agree that, on the happening of any
specified event which does not depend upon the will of the donor, a gift shall be suspended or
revoked. But the condition contemplated by that section should not be repugnant to the
provisions of this section and Section 12 of the Act. Therefore, where the gift is made subject to
a condition or limitation, absolutely restraining the donee, or any person claiming under him,
from transferring his interest in the property, the condition or limitation is void. The reason is,
that the provisions of this section and of Section 12 are very general and refer to all transfers,
whether by sale, exchange or gift, or otherwise. The condition imposed upon the donee must be
consistent with the general principles in regard to conditions in transfers contained in this
chapter. So, where a gift transfers full proprietary rights in the property gifted, and it recites that
the donee or his successor shall have no right to transfer the property, and that if he does transfer
it, the transfer would be invalid and the donor or his successor would have a right to revoke the
gift, the condition is void as it is repugnant to the estate created by the gift.42

Section 126 of the Act further provides, that a gift may also be revoked in any of the cases, in
which, if it were a contract, it might be rescinded, but not to affect the rights of a transferee from
the donee for consideration without notice. It is clear, that the condition of revocation operates
only as a personal covenant; it does not restrict the interest of the donee and is not repugnant to
the gift under this section. Therefore, on a gift with a condition, that the donor shall be at liberty
to revoke the gift if the donee transfers the property without his consent, the condition is not hit
by the provisions of this section. In Ma Yin Hu v. Ma Chit May,43 the donee executed a registered
deed the same day on which the donor executed the deed of gift by which he agreed not to
transfer the property without the consent and permission of the donor and that, if he did so, he
would return the property to the donor; it was held, that the two documents must be treated as
forming part of one transaction, that the case fell within the provisions of Section 126, as, at the
42
Brij Devi v. Shiva Nanda Prasad, AIR 1939 All 221.
43
AIR 1929 Rang 226.

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time of making the gift, it was agreed by the donee that the gift would be revoked on his
transferring the property without the donor’s consent, that is, on the happening of any specified
event, which did not depend on the will of. the donor, and that the agreement did not contravene
the provisions of this section, since there was a promise to the donor personally, and it was only
the donor who could revoke the gift in his lifetime.

Application Of The Section To Partitions

Cases of restraint on partition are dealt with in comment under Section 11. It is to be observed,
however, that this section can be applied only if the partition operates as a transfer or effect a
transfer.

A clause, prohibiting alienation except with the consent of all the members of the tarwad,
provides a definite indication that the document is only an arrangement for maintenance and not
a deed of partition. Such a clause cannot be brushed aside as a clause in restraint of alienation;
for, in a maintenance arrangement, a provision can be made for the different branches and it can
also be provided that they shall not have the right to the properties allotted to them but to take
only the income thereof and that they shall not alienate the properties without the consent of all
the members of the tarwad.44

A lease of immovable property is determined by forfeiture, in case the lessee breaks an express
condition which provides that on breach thereof the lessor may re-enter. 45 The amendment, made
in clause (g) of Section 111 by Act 20 of 1929, makes it clear that a breach of a condition against
transfer will not entail forfeiture unless the condition reserves a right of re-entry. In view of the
said amendment, a condition in a lease that, in case of transfer, the lease shall be void may be
said to be insufficient to determine the lease, and the breach of the condition may be said only to
give the lessor a right to an injunction and damages,46and not a right to determine the lease.47

44
Raman v. Krishnan, AIR 1958 Ker 265.
45
Section 111. Clause (g) of the Act.
46
Tamaya v. Timapa, ILR 7 Bom 262.
47
Khetra Nath v. Baharali, AIR 1929 Cal 228.

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The above view is obviously founded on the ground that Section 111 of the Act is exhaustive of
the modes in which a lease can be determined and that a lease cannot be determined in any other
way.

It is, however, to be observed, that the exclusion of leases from the main provision of this section
and Section 12 is based on a very definite principle. The definition of a lease, in Section 105 of
the Act, begins with the words “a lease of immovable property is a transfer of a right to enjoy
such property”. It is thus nota transfer of the property itself which remains the property of the
lessor. Clearly, the Legislature has recognised, as a fundamental principle, that the owner of
immovable property should be able to transfer, by way of lease, a right to enjoy such property,
without necessarily rendering himself liable to accept, as a tenant, some person who may, on
various grounds, be obnoxious to him. The Legislature has recognised this principle as of such
importance as to override the general principle embodied in this section, that the owner of an
interest in property should not be absolutely restrained from disposing of his interest.

This section expressly allows in the case of a lease, a condition or limitation, absolutely
restraining the lessee from disposing of his interest in the property. But it does not lay down what
would happen if the condition is broken. It seems to be clear that if the lessor desires that, on
breach of the condition, the lease itself should come to an end, he must insert a covenant in the
lease, providing that, on the breach, he shall have the right to determine the lease, and to re-enter.
If such a term is not embodied in the instrument of lease, the lease is not determined but the
question remains whether the transfer in contravention of the terms of the lease is void or
voidable or valid. It seems, that if the transferee from the lessee who has covenanted not to
transfer his interest is recognised by the lessor, the transfer is not hit by the covenant against
alienation in the lease.48

In Sachindra Mohan v. District Magistrate,49 a dar-taluk patta executed in Tripura State

contained a condition against alienation without permission in favour of an outsider but reserved
no right of re-entry to the lessor. The lessee sold his interest without permission to an outsider. It
was held, that even if the deed be deemed to be operative, the mere fact that, in the terms, it had
been laid down that any alienation without permission shall be void, did not make the transfer

48
Khetra Nath v. Baharali, AIR 1929 Cal 228.
49
AIR 1956 Tripura 9.

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absolutely void. It was observed, that the transfer, in favour of the alienee, for valuable
consideration could not be said to be void, as the right to question the alienation will be deemed
to have been waived under Section 112 of the Act.

In the former case, the lessee being incompetent to transfer his interest, any transfer by him in
contravention of the terms of the lease, is void. The transferee from the lessee, in such a case gets
no right.50 But, in the second case, a transfer made without consent or permission is merely
voidable at the option of the lessee, although it is true, that the restriction on assignment prevents
the lessee from transferring his interest, in whole or in part, without the consent of the lessor.

If alienation of the property was restrained and it was leased out then alienation of leasehold
without proper permission of collector would be treated as void. Without declaring alienation
void or determining lease it was not permissible that the collector proceeded to resume
leasehold.51

A stipulation in an instrument, providing that if the interest of the lessee is sold at auction for
arrears of rent due to the lessor, then all agreements entered into between the lessor and the
lessee shall be extinct and stand annulled,—the transaction being a lease and the condition being
obviously for the benefit to the lessor-does not contravene the provisions of this section. 52 In
such cases, the covenant runs with the land, so as to be operative not merely between the
grantors and grantees but also between their representatives in-interest and the holders of
derivative titles from them. The only restriction imposed is that the holder of a derivative title
from the lessee would be in peril in the event of a sale of the lessee rights for arrears of rent.83
When the impugned clause did not place a complete ban on transfer but only laid down that the
interest of all leaseholders may be transferred but with the written permission of the Dy.
Commisionerr., there is no contravention of Section 10.53

Where an owner of property leases it under a condition that the lessee shall not transfer his rights
to anyone, except, to him for a certain price, the lease does not convey the proprietary title and
what is created is merely a tenancy, and this section does not prohibit such a transaction.54

50
Jackie v. Venkataramana, 28 IC 904.
51
Dinesh Chhapolia v. State of Orissa, AIR 2008 (NOC) 844 (Ori).
52
Madhusudan v. Midnapore Zamindari Co., AIR 1919 Cal 942.
53
Bola Ram Chaudary v. State of Bihar, AIR 1990 Pat 20.
54
Har Dayal Singh v. Nauratan Singh, AIR 1934 All 358.

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~ 19 ~
 EXCEPTIONS TO THE GENERAL RULE
Section 10 provides two exceptions to the rule against inalienability. First, Section 10 does not
prohibit conditions or limitations in the case of a lease, which are beneficial to the lessor or those
claiming under him. Second, the property may be transferred for the benefit of a woman who is
not a Hindu, a Muslim, or a Buddhist, such that she shall not have the power to transfer the
property or change her interest therein during her marriage. This exception is based on
the doctrine of covertures that operated in England in the nineteenth century. There, women
could be given property for their enjoyment without the right to alienate the property during her
marriage. The rule protected women from being forced to alienate their property in favour of
their husbands. However, despite the abolition of the doctrine of covertures in England, this
exception continues to remain on the statute books in India.

Lease

Conditional transfer is valid in the case of lease where the condition is for the benefit of the
lessor or those claiming under him. Lease is a transfer of a limited interest where the lessor
(transferor) reserves the ownership and transfers only the right of enjoyment to the lessee
(transferee). A lessor can impose a condition that the lessee will not assign his interest or sub-
lease the property to any other person. Such a condition will be valid. This exception applies to
permanent leases too. The Supreme Court has held that this section does not carve out any
exception with regard to perpetual or permanent lease. Thus, any condition restraining the lessee
from alienating leasehold property is not invalid.55

A condition in the ease that the lessee shall not sublet or assign his interest to anyone during the
tenure of the lease is valid. 56 Similarly, a stipulation in the contract of lease that the lessee would
not sublet the premises, and if he does, he would have to pay a fourth of the consideration

55
RaghuramRao v Eric P. Mathias, AIR (2002) SC 797.
56
Raja JagatRanvir v Bagriden, AIR 1973 All 1.

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as nazaar to the lessor,57 is valid and enforceable. A condition in the lease deed that the lessee
would compulsorily have to surrender the lease in the event the lessor needs to sell the
property again is valid.58

Married Women

The proviso enacts that property may be transferred to or for the benefit of a woman (not being a
Hindu, Muhammadan or Buddhist) so that she shall not have power during her marriage to
transfer or charge the same or her beneficial interest therein. It recognises another exception to
the restraint on the power of alienation, which may be introduced in marriage settlements,
whereby property may be settled for the separate use of a married woman without power to
transfer the corpus of the estate.

Section 8 of the Married Women’s Property Act III of 1874, provides that a person entering into
a contract with a married woman, with reference to her separate property, may sue and recover
against her to the extent of that property. Full meaning can be given to this section, without
imputing to the Legislature an intention to ignore conditions in restraint of alienation.59

Statutory effect has been given to the above view by the amended proviso to the aforesaid
Section 8, substituted by Section 2 of the Transfer of Property (Amendment) Act 21 of 1929,
which expressly provides, that a decree passed against a married woman under Section 8 cannot
be executed by attachment or sale of property which she is restrained from alienating during her
marriage.

Under Hindu law, an idol represents a deity or a spiritual being, which is supposed to exist
forever. Since it is not a natural person, it cannot act like human beings. Therefore, it cannot, by
itself, transfer any property. Such acts have to be done by a trustee, or a manager, or the bait, on
its behalf.

57
Sardakripa v Bepin Chandra, AIR 1923 Cal 679.
58
Rama Rao v Thimappa, AIR 1925 Mad 732.
59
Goudoin v. Vencatesa, ILR 30 Mad 378.

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An endowment may be made subject to a condition that the property shall be inalienable, either
by a voluntary or involuntary transfer.

The prohibition against a condition or limitation absolutely restraining the transferee from
transferring the interest transferred to him, as laid down in this section, does not affect the idol to
whom the transfer is made, because an idol by itself is incapable of making any transfer or
disposing of its interest in the property. The disposal, if it has to be made, can only be made by
someone else acting on its behalf. The conditions, under which someone else can make the
disposition, must be governed by some other law and not by this section.

A doner is competent to lay down a condition or limitation that the trustee, or manager, or Sheba
it, acting for the idol, in whose favour the endowment is made, will not be competent to dispose
of the property. If such a condition is imposed, the property cannot be transferred either by a
voluntary or an involuntary sale.60

Ordinarily, property donated for a religious purpose is inalienable, but it is competent to a

trustee, or manager, or Sheba it to incur debts and borrow money for the proper expenses of
keeping up the religious worship, repairing the temple or other property of the idol, defending
hostile litigation, or attacks, and the like objects. The power, however, to incur such debts must
be measured by the existing necessity for incurring them.61

Repugnant conditions

Section 11of the Transfer of Property Act deals with repugnant conditions. Repugnant conditions
are those that are inconsistent with the nature of the interest transferred. Section 11 prohibits the
imposition of any condition directing the transferee to apply or enjoy in a particular manner, any
interest that is transferred absolutely in a particular manner. Such conditions or directions are
void and the transferee is entitled to receive property as if such a condition did not exist in the
first place. The transfer itself is, however, not invalidated. These conditions are inconsistent with
the nature of the interest transferred. Therefore, they are called repugnant conditions.
60
Mukundji Mahraj v. Persottam Lalji, AIR 1957 All 77.
61
Prosunno Kumari v. Golab Chand, LR 2 IA 145.

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Illustration: A and B enter into a sale deed for a piece of land. The terms of the sale deed provide
that the piece of land should be used for the purposes of starting a factory for the manufacture of
jute textiles only. This condition is invalid. B can enjoy the land in any manner that he chooses
and the sale deed itself continues to be valid.

Thus, no life interest can be created in favour of a vendee in a contract of sale. 62 A gift
restraining enjoyment is void.63 Payment of a certain amount to the vendor out of the profits of
property by way of rent after the sale is illegal. 64 A direction in the restraining of partition in a
gift or will is void even though the restriction is limited in time to the sons attaining majority.65

The exception to this rule according to the second paragraph of Section 11 is that if the transferor
owns another piece of immovable property, he may, for the benefit of that property, impose a
restriction on the enjoyment of that by him. In such a case, the restriction on the enjoyment of the
interest would be valid and saved by Section 11 of the Transfer of Property Act.

62
Manjusha Devi v Sunil Chandra, AIR 1972 Cal 310.
63
N. Manekal v BaiSavita, CA No 959 of 1963 decided on Oct 1(SC).
64
State of Rajasthan v Jeo Raj, AIR 1990 Raj 90.
65
Umrao Singh v Baldeo Singh, AIR 1933 Lah 201.

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 CONCLUSION
The equitable principle of law, enacted in this section, governs the restraint upon the power of
alienation, independent of the provisions of this Act. Any covenant against alienation is
repugnant to the nature of the estate created by permanent conveyance of property, by sale, gift,
or otherwise. In the case of the permanent dedication of properties to deities, the sole object of
dedication is the performance of services and worship of the deities. As a necessary corollary to
this paramount object is the power of the trustee or manager, or the bait, in charge of the
dedicated property, to alienate, wholly or in part, such property for the purpose of keeping up the
religious service and for the preservation of the property. Such trustee, or manager or she bait has
undoubted power to incur debts and alienate the dedicated property in a case of need, or for the
benefit of the estate. If such a trustee, manager, or a Sheba it is to have no such power, the very
object of dedication would be frustrated and the worship of the deities may suffer. Therefore, a
gift to a deity with a condition not to alienate, even when pressing necessity or benefit to the
estate may demand it, will render ineffectual the entire dedication, since the preservation of the
property, meant to subserve the interest of the deity, will prevail over the legitimate interests of
the deity,—a fact hardly consistent with the intention of the donor and the interest sought to be
created by the instrument. In the absence of a power of alienation, the deities, in many cases, will
languish and may eventually vanish, though the gifted property may thereby remain intact.
Having in view, the primary object of the dedication, it would be unreasonable to assume that, by
generally restricting the power of alienation, the donor intended to abrogate the well-established
principle that a trustee, or manager, or Sheba it can alienate the dedicated property for legal
necessity or the benefit of the estate. For these reasons, conditions or limitations against
alienation are considered void. This section does nothing beyond laying down the well-
recognised principle, upon which it is based, and this principle applies also to cases that do not
directly come within the purview of this Act. It must be held, therefore, that restriction on the
power of the trustee, or manager, or Sheba it, to alienate the dedicated property is void and
inoperative.

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 BIBLIOGRAPHY

BOOKS

1. Gour, Dr. Sir Hari Singh, Commentary on the Transfer of Property Act, Vol. I, 2013, Delhi
Law House.
2. Mulla, Sir Dinshaw Fardunji, The Transfer of Property Act, 12 th ed., LexisNexis
Publications, 2015.
3. Pradhan, Poonam, Property Law, 2013, LexisNexis Publications.
4. Row, Sanjeeva, Transfer of Property Act, Vol. I, 2012, Universal Law Publishers.
5. Vakil, Darshaw J, Commentaries on the Transfer of Property Act, 5 th ed., LexisNexis
Publications, 2017.

WEBSITES

1. http://www.lawctopus.com/academike/restraints-on-transfer/
2. http://www.legalservicesindia.com/article/article/easement-restrictive-of-certain-rights-481-
1.html
3. https://www.academia.edu/14343318/Sec_10_and_11_of_TP_Act_1882
4. http://articles.economictimes.indiatimes.com/2007-10-28/news/27673266_1_transfer-
property-act-condition
5. https://indiankanoon.org/doc/392816/

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